September 18, 2023

Hawaiian Airlines sees advantage in Amazon pivot to Airbus freighter


WASHINGTON — The introduction of Airbus A330 freighters in Amazon’s air logistics operation opens the door for Hawaiian Airlines to capture more business from the retail giant if it proves a reliable partner under a new arrangement to fly parcels that starts next month, the company’s chief executive said.

Hawaiian Airlines (NASDAQ: HA) received its first A330-300 freighter in July and is ready to begin flights for Amazon Air in October while air and maintenance crews finish familiarizing themselves with the aircraft and airport ground procedures for cargo. The Honolulu-based carrier will eventually operate 10 package freighters on Amazon’s behalf under a 10-year contract struck last fall. 

Amazon (NASDAQ: AMZN) appears to have identified the A330, a midsize widebody aircraft, as the next platform for its air logistics activity. Older Boeing 767s it primarily deploys are starting to reach the end of their service life and passenger planes available to convert to a cargo configuration will soon be scarce.

Hawaiian CEO Peter Ingram told FreightWaves that presents an opportunity for the airline to grow its Amazon business, noting that Hawaiian faced a similar decision 13 years ago when it started taking A330-200s for its passenger fleet after having flown 767s up to that point.

“I think if you look at the Amazon fleet, you can speculate that they’re thinking about the A330-300 in their fleet as a combination of growth and also replacement of the 767s that they have been operating with various carriers throughout their network. We see the opportunity for growth. It’s going to be up to us to operate efficiently and well,” Ingram said in an interview last week on the sidelines of the U.S. Chamber of Commerce’s Global Aerospace Summit here.

“We’re very on-time focused in our passenger business and I know Amazon is very on- time focused in their business. So the best way we can put ourselves in a position for growth in the future is by operating well, with a high completion factor and with great on-time performance. That’s something our team has been familiar with on the passenger side and we intend to do the same on the freighter side,” Ingram said.

Amazon has informed Hawaiian Airlines what routes the first two planes will fly, but Ingram declined to disclose them. 

A search of flight activity on Flightradar24 shows the first A330 freighter conducting short practice flights at San Bernardino Airport in California, where Amazon has its West Coast regional air hub, in the first week of September. On Tuesday, the plane arrived at Cincinnati/Northern Kentucky International Airport (CVG), where Amazon’s national superhub is located and where Hawaiian Airlines has established its pilot base. 

Whether San Bernardino becomes the first destination for the A330 is unclear. The airport may simply have been a convenient station for pilot training that has fueling contracts in place. A trunk route between CVG and a key secondary hub like San Bernardino, however, is a logical choice for a large cargo jet like the A330. Amazon media representatives did not respond to questions about plans for the new cargo jet.

Hawaiian will operate the A330 cargo jets in Amazon’s air network around the U.S. mainland, helping to expedite delivery of online orders, but would be open to discussing the possibility of flying trans-Pacific or other international routes to deliver imported goods if Amazon had such a need, Ingram said. 

New kid on the block

Amazon has two incumbent air partners that operate 767s on its behalf. Air Transport Services Group (NASDAQ: ATSG), which leases cargo aircraft and also flies them for customers that need that service, operates 47 Boeing 767s for Amazon. Atlas Air has 18 767s in the Amazon system.

Amazon this year returned to ATSG five 767-200s that are older and had reached the end of their lease term. The Amazon fleet outsourced to ATSG mostly consists of larger 767-300s. Amazon officials have said the 10 Airbus A330s being placed with Hawaiian are to replace 767-200s, not for growth.

Ingram said Amazon approached Hawaiian to bid for the transport service contract after it decided to invest in the A330 fleet because of the airline’s experience operating the A330 for passengers.

Hawaiian Airlines CEO Peter Ingram talks about the future of commercial aviation on a panel at the U.S. Chamber of Commerce’s Global Aerospace Summit on Sept. 12, 2023. (Photo: U.S. Chamber)

ATSG Chief Executive Rich Corrado said Hawaiian from the beginning had the inside track for the job.

Amazon “tends to select carriers that already have the aircraft on certificate. It takes an airline about 10 months to a year to put an aircraft on certificate [with the Federal Aviation Administration] and it also costs a lot of money, somewhere between $6 million and $8 million, to do that type of work. So that puts us at a disadvantage in bidding where we didn’t have it [the A330] on certificate,” Corrado said on the company’s third-quarter 2022 earnings call with analysts. 

Mike Berger, ATSG’s chief strategy officer and then-chief commercial officer, didn’t rule out ATSG becoming an A330 operator in the future. The company two years ago made a strategic decision to diversify its leasing program by investing in used A330 passenger jets and paying to have them overhauled to carry large pallets. It has secured the right to convert 29 of the medium widebodies with Airbus affiliate Elbe Flugzeugwerke (EFW). It already has 20 commitments from international customers. The first one is scheduled to arrive at the production facility in October. 

“We see Amazon historically look for multiple providers of aircraft as they develop their network so we stand ready to support Amazon as our largest customer and shareholder in the future. The Amazon decision really does validate … that the 330 is the next aircraft that we want to get ourselves into” as 767 feedstock becomes more difficult to find,  Berger said.

Amazon is leasing the Airbus jets from Seattle-based Altavair, which is also sending the post-passenger planes to EFW for ruggedizing the cabin interior and installing a large cargo door. Ingram said Hawaiian will receive the second A330 in December and that it will enter service early next year. The airline will have nine freighters by the end of 2024, with the 10th one following in early 2025. The initial converted freighter is less than 5 years old and never entered service with original customer Hong Kong Airlines. 

The Amazon deal, which includes an option for the retailer to eventually acquire a minority stake, represents the first time Hawaiian Airlines has ever operated dedicated cargo jets. It is in the final stage of implementing a detailed project plan for launching what is essentially a startup airline within an airline.

Preparation includes hiring about 160 pilots for the freighter operations, training them and establishing work rules that differ from those for A330 passenger aircraft. Pilots will also be based on the mainland, instead of Hawaii. Ingram said the airline will probably carry out line maintenance in several locations based on the flight schedule Amazon determines. 

In April, Hawaiian completed the transition of A330 maintenance from Delta TechOps to its own personnel. It operates 24 A330-200 passenger jets. Executives said that self-managing maintenance will allow it to exercise greater control over day-to-day operations and save money, especially as the A330 freighters are introduced into the fleet and lower per-unit costs. 

Meanwhile, Hawaiian Airlines expects to receive its first Boeing 787 passenger jets early next year, some of which will replace early model A330s. Ingram said the planes, which are slightly larger than the A330, will provide more space for cargo. 

Click here for more FreightWaves stories by Eric Kulisch.

Contact Reporter: [email protected] 

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